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Product Guide Chairs and dental units

3 key considerations to ensure return on investment from your new dental equipment When it comes to buying dental equipment, some purchases are no-brainers. There are those that are common sense (such as when replacement costs are more economical than paying for repairs) and those that are technology driven (you wouldn’t want to be the only practice using film when every other practice is using digital imaging). But some purchases, while perhaps less essential, will be more exciting, and that’s where the decision-making process can get a bit blurred. So how can you justify the purchase of that top-of-the-line patient chair? Whether you’re making the purchase for the first time, or updating an existing chair, the return on investment (ROI) is one way to determine if the chair will be worth the expense, and if patient care will actually improve as a result of it. At Credabl, we’re focused on ensuring you make the best decisions for the success of your practice. We’ve compiled three considerations to measure whether the investment you are making will lead to a positive return for your business:

1. Generating new income or offering a new service

If you’re already in practice and upgrading a chair, you’ll know the equipment already drives income in the practice. When it comes to replacing or upgrading it, you need to consider whether the amazing advances to the equipment will be put to use in your practice, and whether your current space can accommodate the equipment if its dimensions have changed. If so, you’re likely to encounter additional expenses to renovate and fit it in. By comparison, if you’re buying a chair for a new practice, it’s your feature piece, and it’s easy to get carried away with the bells and whistles top-of-the-range options. Forecasting what features of


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the chair you’re likely to use are key in determining whether you need all the added extras. Lastly, if you’re adding an additional chair within your practice, you need to ensure it is going to create value in your practice. It’s important to calculate whether or not the additional fee income it’s likely to generate will cover the cost of the chair, and ultimately improve your profit. A simple calculation for this is the number of expected patients per month x expected revenue minus the monthly loan repayment. The team at Credabl can assist you in working through this calculation.

2. Methods of payment

The most common quandary here is to finance or to pay cash. And there are advantages to each. It’s only natural that many people think paying cash feels good! There are no monthly repayments to manage and, on the surface, it seems to make sense as it instinctively feels like it’s the cheapest option. However, many people aren’t really paying cash as they redraw on things like home loans, and those that are actually paying cash will be sacrificing a potentially tax-deductible financing option. Equipment finance usually offers structured repayment terms and preserves working capital in the practice. Generally, the repayments (or financing costs & depreciation) can be tax deductible against practice income and at the end of the agreement there is a plan in place for you to take final ownership of the equipment. Further, suppliers may allow you to trade in old pieces of equipment before the end of the finance agreement to enable you to purchase a new model and keep your monthly commitments the same. Always ask yourself “what else could

I be doing with this money?” In some circumstances it absolutely makes sense to pay cash, but in business cash[flow] is king, so keeping your cash for a rainy day, and financing your new chair, may be more advantageous for your overall business position. HOT TIP: Depending on the term of finance, there are some structures where the interest paid on the loan is equal to the interest earned on cash in the bank. In this instance, “borrowing” costs nothing and you still have your cash.

3. Intended life span of the equipment

Matching loan terms with equipment life span is important as you don’t want to owe money on gear you’ll have to replace, whether it be due to changes in technology or just aging equipment. Further, most equipment does not begin generating revenue on day one. In fact, it can take months to build the business and collect the patient payments needed to begin payback. It’s important to factor this into your life span calculations. The ROI of new equipment is an important way to measure the monetary value of your purchase. However, do remember that purchasing new equipment, may also be about marking your competitive advantage or element of distinction in today’s crowded marketplace. Don’t underestimate the link between giving people a reason to talk about your practice and filling your appointment book! If you’ve got your eye on a new dental chair or practice equipment, speak with the team at Credabl. We can assist you in working through the numbers to ensure the new purchase is viable.  For more information, contact Credabl today on 1300 CREDABL (1300 27 33 22) or visit You can even live chat with us online!

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Bite March 2019